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New Zealand Business Confidence

New Zealand: Business confidence decreases in August after having reached a 14-year

August 29, 2013

Confidence among businesses eased in August according to the ANZ Bank Business Outlook, which reported that a net 48.1% of businesses surveyed expect economic conditions to improve in the coming 12 months. The result was below July's 52.8%, which was the highest level recorded in 14 years. Despite the decline, business confidence remains well above the 0-point threshold separating optimism from pessimism. ANZ stated that, "the depths of winter typically get people down, and our seasonally adjusted estimate showed no change." ANZ added that, "there is a huge degree of optimism percolating across the economy."

The monthly reading reflects lower business sentiment in almost all sectors of the economy compared to July. Only construction continues to show sustained levels of optimism, with a net 71.9% of businesses expecting better business times ahead. That said, businesses' expectations for their own activity, which is a better predictor of economic activity, moderated for the second consecutive month in August.

High levels of business confidence bode well for investment going forward. FocusEconomics Consensus Forecasts panellists expect fixed investment to grow 7.8% in 2013, which is up 0.3 percentage points from last month's estimate. For 2014, the panel sees fixed investment accelerating to 8.3%.

Author:Ricardo Aceves, Senior Economist

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New Zealand Business Confidence Chart

Note: Percentage of respondents expecting improvement in general business conditions minus percentage expecting deterioration. An index number above 0 indicates that optimists outnumber pessimists, while a number under 0 indicates more pessimists than optimists. The survey is not conducted in January.Source: National Bank of New Zealand.

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